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Robert Higgs, senior fellow at the Independent Institute and author of Crisis and Leviathan, discusses the theory that Islamic terrorists and other “outsiders“ brought about the 2008 financial crisis, rather than loose monetary policy and securitization run amok; how to make a quick buck by pitching ridiculous reports to the Pentagon; the government’s post-9/11 spending binge that permeated throughout government, not just in the Pentagon; why wars are financed with deficits instead of direct taxation; the weak alternatives to the US dollar as world reserve currency; and an economic forecast of 1970s style stagflation.

Robert Higgs is Senior Fellow in Political Economy for The Independent Institute and Editor of the Institute’s quarterly journal The Independent Review. He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, Seattle University, and the University of Economics, Prague. He has been a visiting scholar at Oxford University and Stanford University, and a fellow for the Hoover Institution and the National Science Foundation. Dr. Higgs is the editor of The Independent Institute books Opposing the Crusader State, The Challenge of Liberty, Re-Thinking Green, Hazardous to Our Health? and Arms, Politics, and the Economy, plus the volume Emergence of the Modern Political Economy.

His authored books include Neither Liberty Nor Safety, Depression, War, and Cold War, Politická ekonomie strachu (The Political Economy of Fear, in Czech), Resurgence of the Warfare State, Against Leviathan, The Transformation of the American Economy 1865-1914, Competition and Coercion, and Crisis and Leviathan. A contributor to numerous scholarly volumes, he is the author of more than 100 articles and reviews in academic journals.

I think Mr Higgs needs to read up on his "conspiracy theory", then he would know that the (OPEC) manipulation of the price of oil supposedly goes for both rising and falling prices. Rising of course to increase revenue from sales (and perhaps to strategically damage economies) , and then falling to cut out the development of competitive alternatives to oil. If the price of oil just went up and up and up we would soon be off oil altogether. What a thought!

It seems that Islamists would be low on the list of groups that might have interest manipulating derivatives. Other interested parties would be people who might benefit financially from taking the risk. The risk is that your gamble does not pay off and you pay out. So if you are betting that more or less home owners will default or not default you need to be right or you lost the bet. The problem in the end is the following Derivatives massively leverage the debt in an economy, making it ever more difficult for the underlying real economy to service its debt obligations, thereby curtailing real economic activity, which can cause a recession or even depression. Result great depression etc.

Middle class Americans have two main approaches to the ups and downs of life. When Fortuna smiles on them, they credit their own stupendous virtues. When she frowns on them, they blame a CONSPIRACY! G-ds forbid they credit luck or blame their own mistakes!

Look into the politically motivated "easy money" policy pushed at the nation since at least Greenspan became The Oracle To Listen To with the subsequent serial malinvestments, the Internet bubble followed by the housing bubble and all sorts of retarded shit built on top of inflated expectations of what the future might bright, made worse by banks able to and eager to look into new high-risk financial instruments just to generate an interest rate.

"We suggest that there is a high likelihood that the massive increase in the price of oil is the manifestation of a severe misallocation of resources. The loose monetary policy of the Fed from January 2001 to June 2004 is the likely key factor behind this misallocation. (The federal funds rate was lowered from 6% to 1%.) The tighter Fed stance from June 2004 to September 2007 should undermine the existence of various nonproductive activities and in turn reduce upward pressures on the price of oil.

Regrettably, the loose monetary stance that the Fed has adopted since September of last year, coupled with still very buoyant Chinese economic activity, is likely to counter any downward pressure on the price of oil. The Fed's current policy of fighting an emerging economic slump is, in fact, a policy of deepening the misallocation of resources, thereby promoting higher prices for oil. If our thesis regarding the oil market bubble is valid, then it is the Fed's policies that must be blamed for the erosion in consumers' living standards and not the rising price of oil."

What faith! LOL! Like they've delivered this? "- the politically motivated "easy money" policy pushed at the nation since at least Greenspan became The Oracle To Listen To with the subsequent serial malinvestments, the Internet bubble followed by the housing bubble and all sorts of retarded shit built on top of inflated expectations of what the future might bright, made worse by banks able to and eager to look into new high-risk financial instruments just to generate an interest rate."

Yes, they've certainly delivered. What they haven't delivered is anything they can manage to suppress that might hurt their bottom line, especially alternative energy (re Big Oil), of which there is abundance of possibilities, but very very few that have yet to be developed to any significant degree. There are a number of reasons for this, one of which is the unsurprising concerted effort by Big Oil to block such development. Here's an example: http://www.huffingtonpost.com/vinod-khosla/big-oi…

OPEC had nothing to do with the economic catastrophe of 2008. But why are we even calling it that? It turned out to be another minor hiccup in the market. Just look around – it's back to business as usual, the bad apples are all gone and the guys who saved us all from perdition are back in trhe helmsmens' chairs and collecting their bonuses once again. All is good, no need to panic or even regulate, the market can regulate itself.

But there are a few mortgage loans than need some attention, and a little bit of money-printing that could cause a minor problem. But let's dwell on the positivity that tomorrow is another day.

Say maybe AlQaeda did cause Fannie and Jimmy to fund all those dud morgages and AIG to sell too much insurance on them, Bin Laden is wealthy, y'know?.